Association
of American Physicians and Surgeons, Inc.
A Voice for Private Physicians Since 1943Omnia pro aegroto

Volume 63, No. 2 February 2007

HILLARY CARE AGAIN?

With the party of Hillary Clinton in the ascendancy, the
drive to complete the government takeover of American medicine is
gaining momentum. The movement, of course, did not begin in 1993,
nor did it end with the defeat of the Clinton Health Security
Act. The back-up strategy of piecemeal implementation continued
in the Republican Congress and in various state legislatures.
We're far down the field.

Senator Ron Wyden (D-OR) already has a 166-page bill, the
Healthy Americans Act, to reach the goal of universality.

It might take a Democrat in the White House to finish the
job; the bill is viewed as the opening of the 2008 presidential
campaign. Ron Pollack of Families USA calls it "a first step; a
work in progress."

Many lessons were learned from the failure of the Health
Security Act. For one thing, the complexity and devilish details
in the 1,364-page Clinton plan have been left out delegated to
the IRS (the collector of premiums) and the new state Health Help
Agencies (HHAs). And Health Savings Accounts are (still) in the
provision that bought business and "conservative" support for
HIPAA and the Medicare drug benefit.

Taking a cue from Clinton act opponents, Wyden said his plan
would "guarantee health coverage for every American that is at
least as good as members of Congress receive and can never be
taken away." The minimum premium is for a plan at least as
comprehensive as the Blue Cross/Blue Shield standard option plan
in the Federal Employee Health Benefits Program (FEHBP). This has
a $15 office-visit copayment and a $250 yearly deductible for
hospital in-patient services.

The FEHBP has been touted for years by the Heritage
Foundation, and by all 2004 Democratic presidential candidates.

People would have the option of paying more for "more
lavish" benefits. But Wyden emphasizes that workers would
not have the option of buying a "bare bones" package and
pocketing the savings.

Under this act, everybody would have to have a HAPI (Healthy
America Private Insurance) plan, unless on Medicare or certain
other plans. Persons at the poverty level would be fully
subsidized. Persons up to 400% of poverty 300% is the median
income level would receive subsidies on a sliding scale.

By definition, HAPI plans would be affordable. And debts
created by failing to pay premiums would not be dischargeable
through bankruptcy.

While no one, because of community rating, would be
permitted to benefit from low-risk status, premium discounts
might be offered for "meaningful" or "successful" participation
in an approved wellness program. There might also be discounts
for "certain healthy behaviors, such as weight management,
exercise, nutrition counseling, refraining from tobacco use,
designating a health home, and other behaviors determined
appropriate by the Secretary."

The plan is supposed to save $1.48 trillion from 2007 2012,
according to the Lewin Group, because of assumed administrative
savings, increased price competition for insurance, and a
reduction in the rate of spending growth. This is to occur
despite an expected increase in demand for services by previously
uninsured persons, and despite requirements for mental health
parity and guaranteed issue. It assumes people would move to HMOs
and save 12% in doing so.

Employer-provided insurance would be eliminated the best
feature of the plan and the reason it is gaining business
support. Current employer spending for health benefits would be
"cashed out" as wages which the employee would have to spend on
premiums. All employers would then have to make an
"employer responsibility contribution," varying by revenue and
number of employees the equivalent of a payroll tax.

All employers would have to administer employee
selection of a plan, along with the withholding of the lowest
cost premium as well as additional premiums for richer plans.

There would be "choice." The HHAs would have to offer at
least two HAPI plans, and no more than 10, lest consumers be
confused. All would have the same "core benefits." Supple-mental
abortion coverage would have to be made available, unless the
insurer was owned by a religious organization. HHAs shall ensure
that individuals are well informed about their right to refuse
treatment, especially at the end of life.

Within two years after enactment, hospitals would be
required to demonstrate improved quality control. Insurers would
have to use a uniform set of clinical performance standards and
make information available to consumers on their success in
prevention and disease management.

The Lewin Group claims that the plan would cover more than
99% of "Americans." But it won't cover illegal aliens, and 43.6%
of 46 million uninsured "Americans" are noncitizens.

The IRS would get an additional 25% or $2.2 billion to
administer and audit the premium and subsidy components. The
Lewin Group writes that no verification of coverage, penalties,
or fines would be needed since people could not avoid paying the
premium by failing to enroll in a plan.

But according to Wyden's summary, "Every time an indi-vidual
interacts with state, local, and federal government registering
their car, enrolling their children in school, applying for a
driver's license or paying their taxes they can be required to
verify their enrollment in a private insurance plan."

The Wyden plan is not socialized medicine all the
HAPI plans are private. It is fascism, writes Greg
Scandlen.

The plan would not simply be a government takeover of
medicine, but government intrusion into every area of life.

States Drive Toward "Universal" Coverage

California. Gov. Schwarzenegger, as part of a sweeping
plan to mandate universal coverage, would charge physicians a 2%,
and hospitals a 4% "dividend" [Newspeak for "tax"] on revenue.
This would offset the theoretical $10 billion increase in revenue
from more insurance and higher Medi-Cal payments. The plan would
cover all children, including illegal aliens. It has an
individual mandate and a "play or pay" mandate on businesses with
10 or more workers.

Illinois. A state task force proposes a plan with an
estimated cost of $5 billion, in a state already $5 billion in
debt. It includes individual and employer mandates and subsidies
to persons up to 400% of poverty ($80,000/yr in family income).

Maine. The Dirigo Health Reform Act that went into
effect Jan 1, 2005, was meant to contain costs and cover 31,000
of the state's uninsured in its first year and all 130,000 by
2009. Only 12,153 were enrolled by October 2006. A Blue Ribbon
Com-mission is exploring new taxes, an employer mandate, and a
individual mandate for those above a certain income level.

New Jersey. A plan being drafted for introduction this
spring would force residents to get health insurance and prove
they had it on their state tax forms. New Jersey's 1.4 million
uninsured persons include 300,000 eligible for Medicaid or
FamilyCare, but not enrolled; 614,000 who earn too much to
qualify for those programs; and 400,000 illegal aliens.

New Mexico. Gaining support after several failed
attempts is a bill that would junk the private insurance
industry, put everyone into one pool, and have a government-
appointed commission run the system. About 21% of New Mexicans,
some 411,000, lack insurance; the contribution of illegals, who
are flooding the state, is not considered. Eligibility for the
plan requires "physical presence" in the state for one year and
intention to remain there. Providers may not discriminate on the
basis of "payment status." All payment for all
covered services shall be through the plan.

New York. The state health care commission's objective
of universal coverage has been endorsed by the state medical
association (MSSNY), although MSSNY opposes the idea of taxing
physician revenues to support the bad debt and charity fund,
which benefits only hospitals. A special commission that meets in
secret is forcing hospitals to close or competing hospitals to
merge, wielding the state health commissioner's power to revoke
operating certificates. "This is straight out of Atlas
Shrugged where the government took over the operation of the
railroads" (Buffalo News 11/29/06).

Oregon. After two decades of effort in moving toward
universal coverage, the plan of Sen. Wyden's state is unraveling.
Entire benefit categories have been cut, enrollment is down 75%,
and the plan is closed to new enrollees (Health Affairs
online, Dec 19, 2006).

West Virginia. In a preview of what awaits people
dependent on government for medical care, Medicaid recipients who
don't sign or abide by a health pledge are denied "enhanced
benefits" and are limited to four prescriptions per month. The
pledge includes attending programs as directed.

Replacing Disgruntled Physicians

If the demolition of American medicine drives many
physicians out of practice, and discourages talented young people
from applying to medical school, they can easily be replaced.
Under the J-1 visa program, hospitals can bring in foreign
physicians at less than half the cost of an American-born
physician. The program also allows foreign students to obtain
medical degrees in the U.S. Unlike with an F visa, spouses can
work in a limited capacity, and dependents are also granted visa
status (www.usvisanews.com/j1info.shtml).

According to Independent Task Force Report No. 53 of the
Council on Foreign Relations (Building a North American
Community), governments of the U.S., Canada, and Mexico
"should devote more resources to leading and creating incentives
that would encourage the professional associations of each of the
three countries to develop shared standards that would facilitate
short-term professional labor mobility within North America."
"Harmonization," as in the EU?

Will Insurance Cut ER Use?

Heavy emergency room use is responsible for a large share of
medical costs. Some argue that ER overuse results from lack of
first-dollar coverage of primary care. Medicaid patients,
however, already have such coverage but still use ERs because
they can show up any time, notes Linda Gorman. The most common
reasons for ER visits in order of frequency, according to the
RAND Health Insurance Experiment, were: abrasions/ contusions;
fracture/dislocation; sprains; URI; asthma; otitis media;
gastroenteritis; abdominal pain; back/neck pain; influenza/viral
syndrome; chest pain/heart problem (Newhouse JP, Free for
All?). Which visits would "preventive" care prevent?

Employers, Workers Saving with HSAs

According to a recent RAND study, employers report saving
10% with consumer-directed plans. The savings on premiums may be
considerably more, notes Russ Faria, D.O., of Newport, OR, if
costs include contributions to workers' Health Savings Accounts.
Such savings are huge, he notes, and would be trumpeted as a
great triumph if they occurred with a socialist scheme. Workers
have also cut their spending by 5 12%. Some complain that only
the healthy benefit from an HSA. But now that one can have a
$1,100 deductible and still sock away $2,850, who doesn't
benefit? Sick people like to save money too, Gorman notes. See
News of the Day 1/1/07.

AAPS Calendar

Sham Peer Review Updates

Misuse of NPDB. Over objections of respondents, AAPS filed
an amicus brief in the U.S. Supreme Court in the case of
Arthur J. Misischia, D.M.D., v. St. John's Mercy Health
Systems. After Dr. Misischia spoke out against perceived
unnecessary surgery and fraudulent billing, he was subjected to a
sham peer review, and his hospital privileges were suspended.
Although he prevailed in state court in 1994, the hospital
persisted with a defamatory entry in the National Practitioner
Data Bank (NPDB) until 2003. In 2001, the hospital demanded that
he not testify in a malpractice proceeding as a condition of
removing the defamatory entry. At issue now is a federal appeals
court ruling that would bar access to court if a plaintiff failed
to anticipate future wrongful acts and include them in a
prior action. The brief, posted at www.aapsonline.org, was funded by the American Health Legal
Foundation (AHLF).

Medical Staff Bylaws.AAPS filed an amicus
brief in the appeal of Lawnwood Medical Center v. Randall
Seeger, M.D., in the First District Court of Appeal, State
of Florida (Case No. 1D06-2016, L.T. Case No. 2003 CA 2865). The
case arose from efforts by Columbia/HCA to maximize its profits
from the acquired hospital by means of exclusive contracts. The
Medical Executive Committee objected and prevailed over the
hospital when it resorted to sham peer review of two pathologists
it wanted to replace, Drs. Leonard Walker and John Minarcik.
After multiple losses in court, the hospital lobbied for and
obtained the St. Lucie County Hospital Governance Law, which was
ruled unconstitutional by the lower court.

Exclusive contracts are anti-competitive and are disfavored
by the courts although no longer deemed a "per se" violation of
antitrust law. There was no rational economic justification for
the Governance Law, AAPS argued.

"If this Court were to allow the legislature to rewrite
contractual obligations, the economic harm would be severe....
[N]umerous transactions in the medical field and beyond would be
subject to a new risk of shifting property rights at the whim of
the legislature." (See
www.aapsonline.org for the full brief.)

This brief was also funded by AHLF.

New JCAHO Standard on "Hospital Disruptive Behavior."
To enhance top-down control over physicians in hospitals, the
hospital bar has been advocating its purposely vague and
subjective definition of the "disruptive physician." The proposed
JCAHO LD.3.15 Standard would codify this view nationwide, putting
physicians who have their privileges wrongfully terminated at an
even greater disadvantage if they seek redress in court. Among
the elements in the JCAHO-approved Code of Conduct is "behavior"
interpreted solely by accusers, as exhibited in facial and other
nonverbal expressions, that might been perceived as "threatening"
or harmful to "staff morale." This dangerous standard, writes
AAPS Sham Peer Review Committee chairman Lawrence Huntoon, M.D.,
Ph.D., "will strongly discourage physician whistleblowers from
advocating for quality care and patient safety in hospitals."

"The great enemy of clear language is insincerity.
When there is a gap between one's real and one's declared aims,
one turns as it were instinctively to long words and exhausted
idioms, like a cuttlefish squirting out ink."George Orwell, Politics and the English
Language

Tip of the Month: The receipt of electronic funds alone
does not make you a covered entity under HIPAA. We heard of an
insurance company demanding that out-of-network providers accept
automatic deposits. When our member refused, the insurance
company took his account number from reimbursement checks he had
cashed, and directly deposited future reimbursements into his
account without his consent! Apparently banks do not prevent
unauthorized direct deposits. Fortunately, this bizarre conduct
by the insurance company does not trigger application of HIPAA to
the physician.

Must a Mens Rea Be Proved to Convict a
Doctor?

Ordinarily, specific intent to commit a crime a mens
rea or guilty mind is required for criminal conviction. Yet
the U.S. Court of Appeals for the Fourth Circuit upheld the
conviction of Ronald McIver, D.O., for unlawful distribution of a
controlled substance, resulting in death, and conspiracy to
unlawfully distribute controlled substances, in a case that
hinged solely on alleged deviation from "professional norms" (No.
05-4884). The patient who died had committed suicide to avoid
becoming a burden to his family. The prosecution presented no
evidence that Dr. McIver had any knowledge that some of his
patients were selling the drugs he prescribed.

In a petition for rehearing en banc, attorney John P.
Flannery, II, writes: "The government gives no notice of what is
precisely prohibited until after a physician has been
indicted and sometimes only at trial. In this manner, defendants
are denied constitutional notice of the malum and
discover their crimes ex post facto."

Dr. McIver had called the county sheriff to inquire whether
certain patients were known drug seekers. He never got an answer.
What the government often does after such inquiries is begin an
investigation of the physician. It may "turn" the patient and
have him testify against the doctor.

In the county jail after being sentenced to 30 years, Dr.
McIver nearly died of a heart attack.

A decision on the petition is pending. See the website for
the Opinion and petition.

Patient and Doctor Sue Over Secret Contracts

California allergist Dorothy Calabrese, M.D., an AAPS
member, and Medicare patient Paul Messer sued National Heritage
Insurance Company (NHIC), a Medicare contractor, for abusing the
medical-necessity requirement to ration care. NHIC physicians
admitted that they never read any of the scientific citations
provided to them and did not consult any of the beneficiaries'
experts before denying payment for successful ongoing medical
care that had been paid for by the previous carrier. In a 2005
local coverage determination (LCD) appeal, an administrative law
judge had ruled the services to be medically necessary. NHIC
Medical Director Bruce Quinn refused to release the NHIC contract
or names of its experts, and said that there were no records.

False Claims Act Defendant Pays

In any successful FCA action, including a settlement, the
FCA, unlike many statutes, requires the defendant to pay all of
the plaintiff's costs, which typically exceed $1 million. FCA
litigation has grown exponentially; mediation is strongly advised
(BNA's HCFR 10/25/06).

Correspondence

More Pay Cuts Coming. In a front page story, Robert
Pear writes that in dealing with the "runaway cost of the
Medicare program, Congress has decided to use a carrot instead of
a stick to change doctors' behavior" (NY Times
12/12/06). It is offering "a small bonus with big strings
attached." Doctors will have to report "how often they provide
quality care, as defined by the government." Medicare officials
say they will use the statistics to "reward doctors who follow
clinical guidelines and perhaps penalize those who flout such
standards without justification." Rep. Pete Stark (D-CA),
incoming Chairman of the House Ways and Means Subcommittee on
Health, says that "most doctors will have to accept lower fees if
Medicare is to pay bonuses to the best performers."

Another ingenious tactic to cut physicians' pay is to refuse
to pay consultants if the referring physician's
documentation is inadequate and to require the consultant to
obtain that documentation from the referring physician's records,
substantially increasing the transaction costs. Moreover,
Medicare does not pay for a consultation, but only for an office
visit, when patients self refer.
Lawrence R. Huntoon, M.D., Ph.D., Lake View, NY

Mandatory Auto Insurance. In 2002, the State of
Colorado reported that uninsured motorists made up 12.5% of the
driving population, with the upper-bound estimate at 22%. The
estimate is based on people involved in car crashes. In what
academics call a private communication, a cop said that lots of
uninsured motorists (many of whom are illegal) drive around with
wads of cash and settle on the spot. The rate fell from the
16 18% rate in the 1990s when the state installed a data base
that automatically checks with insurance companies when the car
is registered. This can't account for the sign-up-now-but-cancel-
later dodge or the don't-pay-at-all dodge.
Linda Gorman, Independence Institute, Golden, CO

Cheap, Private EMRs. I simply scan the paper chart on a
high-speed auto-feed Copy Star GS-1820 scanner into a Compaq
Presario computer and burn it to a mini-disk. It takes two
minutes, and the disk with soft vinyl envelope costs 33 cents.
For a few pennies, you can get a sticky label. It fits in a wide
wallet. Any good computer person can set this up in an hour.Thomas LaGrelius, M.D., Torrance, CA

The Huge Waste of Insurance. The increase in
administrative cost in the past 20 years (since the beginning
dissemination of managed care) is so large that it dwarfs every
other source of cost increase in physician practice. Every claim
for less than $100 which must be prepared, transmitted,
adjudicated, and appealed is sheer waste. To get paid reliably,
physicians must collect from the patient at the time of
the visit, and any insurance plan that doesn't facilitate
collection then is incompatible with consumer-driven medical
care.
Donna Kinney, C.P.A., Texas Medical Assn.

What Insurance Destroys. The growing queue of those who
seek to force others to carry a burden not their own encroaches
more and more on our founding principle of individual liberty.
There must be a paternalistic superiority complex in socialist-
minded academics that is short-sighted, naive, and selfish. The
more we are insured, communized, and protected, the fewer
opportunities for compassion, love, and grace. We cannot mandate
these things, and mandates destroy them. "Carry each other's
burdens" is beautifully balanced by "for each should carry his
own load.
Steven Bassett, Oak Park, IL

Insurance vs. the Community. With insurance, there's a
company that wants to maximize profits and minimize losses, and
subscribers who want to game the system and maximize their return
on their premium dollar. Tensions worsen. But a community wants
everyone to do well. A system of HSAs, with 90% of expenditures
paid out of pocket, would keep people honest and frugal.
Community charities also rally to help when unforeseen events
occur, not just for the poor. Currently, people are paying so
much for insurance that they have nothing left for charity or for
medical care!
Alieta Eck, M.D., Somerset, NH

HSAs Much Better Now. A change in the tax law passed in
December means that the maximum amount contributed to a Health
Savings Account no longer needs to exactly match the deductible.
My wife and I immediately changed our policy to find the amount
in the range of deductibles where the "cost" of the deductible
itself, assuming that it is "used up" yearly, plus the insurance
premium leaves us the most "extra money" for the HSA. This tax
change makes HSAs an even better free-market weapon to restore
power to patients. Our insurance broker knew nothing of the
change. He said he'd be making a lot of telephone calls after we
told him of it.
Timothy C. Kriss, M.D., Versailles, KY
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Targets. In the drive to "universal health coverage,"
the first goal/target will be the most vulnerable: children.
Because of the drain on the treasury, disaster awaits both the
children and any and all adults on the government dole. It may be
a war of two parasitic constituencies: "children's advocates" vs.
the lobbies purportedly defending oldsters and the disabled.
Zvi Herschman, West Hempstead, NY